Oil falls on concerns of faltering economic growth to hit demand

LONDON (Reuters) – Oil prices edged down on Wednesday on concerns that oil demand growth will fall as major economies suffer through inflation and supply chain issues though surging prices for power generation fuel such as coal and natural gas limited losses.

Brent crude futures fell 24 cents, or 0.2%, to $83.18 a barrel at 08:30 GMT. US West Texas Intermediate (WTI) crude futures fell 23 cents or 0.2% to $80.41 a barrel.

Both contracts pared losses after falling as much as 70 cents earlier when China, the world's biggest crude importer, released data showing September imports fell 15% from a year earlier.

"The current price point will act as a drag on its foreign crude purchases while simultaneously incentivising a further drawdown in domestic oil stocks."

Meanwhile, the International Monetary Fund on Tuesday cut its growth outlook for the United States and other major economies on worries supply chain disruptions and cost pressures are holding back a global economic recovery from the coronavirus pandemic.

A strong US dollar, trading near a one-year high, also weighed on oil prices, as it makes oil more expensive for those holding other currencies.

However, oil watchers are still focused on whether soaring gas and coal prices will lead to more demand for oil products for power generation.

"There are growing expectations that the high prices for gas and thermal coal are likely to boost demand for alternative fuels such as diesel and fuel oil," ANZ Research analysts said in a note.